Most NDIS providers hear early on that NDIS services are GST-free. That is partly right, and the part that is missing is where the problems start.
Many NDIS supports are GST-free, but only when four conditions set by the ATO are all met at the same time. A participant being on the NDIS is not enough on its own. When one condition is missing, the support is generally taxable, and a GST-registered provider can end up owing GST they never charged.
This guide explains how the rules work, what your service agreements need to say and how to set up your books so the GST is right from the first invoice.
The four conditions for a GST-free NDIS support
The ATO is clear that all four of these requirements must be met. If any one is missing and you are registered for GST, GST generally needs to be included in the price and reported on your BAS.
- The participant has an NDIS plan in effect. The plan must be approved by the NDIA, and it stops being in effect when it is replaced by a new plan or the person leaves the scheme.
- The support is in the plan, and within it. It must be a reasonable and necessary support listed in the participant’s plan. Where the plan sets hours or a quantity, anything you deliver beyond that is not a GST-free NDIS supply.
- There is a written agreement. This can be with the participant or someone acting for them, and it needs to say specific things, which we cover below.
- The type of support is covered by the NDIS GST determination. The support must fall under the 2021 determination that lists which kinds of supports can be GST-free. This is the condition providers tend to know least about.
Why NDIS funding alone does not make a support GST-free
The 2021 NDIS GST determination has two tables. The first covers supports that are GST-free once the other three conditions are met. These include household tasks, help with travel and transport arrangements (excluding taxi fares), interpreting and translation, help to access education and employment, early intervention supports for early childhood, and plan management.
The second table covers supports such as assistance with daily personal activities, behavioural and therapeutic supports and home modifications. These are only covered when the support is also listed in one of three other GST determinations, which deal with care, residential care and health services.
The ATO gives an example of exercise physiology that is in a participant’s plan and delivered under a written agreement, yet is still not GST-free, because it was delivered at a clinic with no Medicare benefit payable and did not fall under any of the other determinations. For therapy providers in particular, this means checking each service type rather than treating the whole NDIS side of the business as GST-free.
The current determination applies to supplies made before 1 July 2027, so it is worth keeping an eye on what replaces it.
What your written agreement needs to say
According to the ATO, the written agreement must:
- identify the NDIS participant
- state that what you are supplying is one or more of the reasonable and necessary supports specified in the participant’s NDIS plan
The agreement can be with the participant or with someone else, including the NDIA, a registered plan manager, or a guardian or relative. It also does not have to be one document. Emails, letters, receipts and invoices can combine to meet the requirement, as long as together they show a binding obligation for you to provide the support and that the support is in the plan.
That flexibility can work against you. In one ATO example involving a plan manager, three separate documents only met the requirement when read together. The simplest fix is to build the right wording into your standard service agreement, so every new participant starts with an agreement that does the job.
Do unregistered NDIS providers charge GST?
Being registered with the NDIS Commission and being registered for GST are two separate things.
The ATO’s four conditions do not include NDIS Commission registration. An unregistered NDIS provider who is registered for GST can make GST-free supplies when all four conditions are met, and a registered provider who misses a condition cannot.
If you are not registered for GST at all, you do not charge GST on any of your sales. The question then becomes whether you should be registered.
Do you need to register for GST if your NDIS income is GST-free?
You must register for GST once your GST turnover reaches $75,000. The ATO defines GST turnover as your total business income, not your profit, minus a short list of exclusions such as the GST included in your sales and any input-taxed sales. GST-free sales are not on that list, so your GST-free NDIS income counts toward the threshold. Some online guides say otherwise, which is why it is worth going back to the ATO’s own wording.
If you are not registered, the ATO expects you to check each month whether you have reached the threshold or are likely to, and you have 21 days to register once you are required to. If you register late, you may have to pay GST on sales made since the date you should have registered, even though you never included it in your prices.
Why GST registration can work in your favour
GST-free is not the same as input-taxed. When your sales are GST-free, you can still claim credits for the GST included in the price of purchases you use to make those sales.
For many providers, that can include costs like vehicles, software, equipment, training and office expenses, depending on how each one is used in the business. If you register voluntarily, you generally need to stay registered for at least 12 months, so it is a decision worth making with your accountant based on how much GST sits in your costs.
Common NDIS GST mistakes to avoid
- Treating every NDIS-funded support as GST-free. Check each service type against the determination, especially supports that rely on the second table.
- Service agreements that do not mention the plan. An agreement that sets out hours and price, but not that the support is in the participant’s plan, may not be enough on its own.
- Missing plan changes and limits. Hours beyond what the plan specifies are not GST-free, and an old plan stops being in effect once it is replaced, so sight the current plan before you invoice.
- Using one tax code for everything. Set up separate tax codes in Xero or MYOB for GST-free NDIS supports and taxable sales, so each sale lands correctly on your BAS.
- Assuming subcontractors can invoice you GST-free. When contractors deliver supports for you, their supply is to your business rather than to the participant, so it is generally taxable.
- Not watching your GST turnover. Because GST-free income counts, a growing provider can pass $75,000 without noticing.
If keeping on top of this is taking time away from your participants, our bookkeeping and payroll team can set up and maintain your tax codes for you. Our guide to cash flow tips for NDIS providers is a good next read if the gap between delivering support and getting paid is putting pressure on your business.
Frequently asked questions
These are the GST questions NDIS providers ask us most. For broader questions, see our answers to common NDIS accounting questions.
Are all NDIS services GST-free?
No. An NDIS support is only GST-free when all four ATO conditions are met: a plan in effect, a reasonable and necessary support in that plan, a written agreement, and a type of support covered by the 2021 NDIS GST determination.
Do I charge GST when invoicing a plan manager?
The same four conditions apply. The ATO treats supports as being supplied to the participant rather than the plan manager, so a support can still be GST-free when the invoice goes to the plan manager for payment.
Does GST-free NDIS income count toward the $75,000 GST threshold?
Yes. GST turnover excludes input-taxed sales, not GST-free sales, so GST-free NDIS income is included when you work out whether you need to register.
Can I claim GST credits if all my NDIS sales are GST-free?
If you are registered for GST, you can generally claim credits for the GST included in purchases you use to make GST-free sales. What you can claim depends on how each purchase is used in your business.
Talk to us about your NDIS GST setup
We work with NDIS providers across Western Sydney and around Australia on bookkeeping, BAS, GST, tax and cash flow. Our director, Anesh Chand, is a CPA, Registered Tax Agent and Xero Certified Advisor, so your GST setup and your wider tax advice come from the same team.
If you would like someone to check your service agreements, tax codes or whether you should be registered for GST, get in touch with our team. You can also read more about our accounting services for NDIS providers, or our guide on how to choose the right NDIS accountant.
This article is general information only and does not take your personal circumstances into account. Speak with a registered tax agent about your own situation.
